AfDB Vice President Solomon Quaynor says that African infrastructure was already struggling to structure projects tailored to the private sector which balanced value for money for the public sector against affordability for the user, before COVID-19 struck.
How do can African countries structure their infrastructure projects to balance value for money for the public sector against affordability for the user?
Private investment key to Africa’s development
AfDB Vice President Solomon Quaynor believes it is imperative that hybrid solutions such as PPPs must be seen and promoted as a way of building back better, stronger, greener, by clawing back private capital to infrastructure while creating much need fiscal room for governments to address multiple other demands, including building health systems resilience.
The AfDB estimates the continent needs up to $170 billion to address its infrastructure needs, with an estimated financing gap of between $68 billion and $108 billion a year. PPPs are regarded as a way to narrow this gap by crowding in private sector investment into infrastructure development and the AfDB is trying to scale up that effort.
AfDB director of infrastructure and urban development Amadou Oumarou presented several rationales for the bank’s effort to develop a PPP framework, including its Ten-Year Strategy (2013-2022) and a recommendation from the bank’s independent evaluation unit to scale up PPP interventions.
Setting up a PPP framework for all
Workshop participants expressed their desire for the AfDB to play a greater role in supporting PPP development in Africa by:
- Strengthening policy and regulatory frameworks and building government capacity;
- Project structuring and advisory services;
- Provision of financing instruments such as de-risking, guarantees, credit enhancements and local currency financing.
Shoubhik Ganguly of Rebel Group International, which partnered with the Bank to develop the framework, said African countries need to learn from each other’s achievement and mistakes: “They need to have standard documents and checklists that will guide institutions in these countries through the PPP lifecycle.”
AfDB division manager for sub-Saharan Africa for the International Finance Corporation Michael Opagi: “One of the challenges regional member countries are faced with is selecting the right project for implementation. Therefore, support should start from there, then going through to actual project preparation makes it a lot easier.”
Private sector participants in the workshop said Development Finance Institutions (DFIs) are indispensable to securing financing for PPP projects in Africa. On example cited of a successful PPP project was the Kigali Bulk Water project, which received significant backing from the AfDB, the World Bank and private sector participants.
Private Infrastructure Development Group CEO Phillipe Valahu said the Kigali Bulk Water project was a perfect example of integrated support to a PPP project which used the three pillars proposed in the AfDB’s PPP Framework. That project benefited from debt funding from PIDG alongside the AfDB, with each providing $19million of senior debt on commercial terms.
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